IRVING ASKS GOVERNMENT FOR $300M
SHIPBUILDER WANTS TO MODERNIZE FACILITIES TO BUILD NEW NAVY VESSELS
Taxpayers are being asked to give at least $300 million to an East Coast shipyard so it can modernize its facilities to build navy vessels despite an earlier stipulation that public funds would not be required for such upgrades.
Irving's Halifax shipyard was selected in 2011 as the winner of a multi- billion dollar program to construct the country's new fleets of warships. Among the requirements for winning the bid was that the yard had the capability to build the vessels and taxpayers wouldn't need to contribute funding to outfit facilities for the task.
But Irving is now retreating on that agreement and the Liberal government has been presented with a request for money. Industry sources say the Liberals are considering providing at least $300 million to the shipyard owned by one of Canada's richest families.
Irving Shipbuilding president Kevin Mooney recently told The Canadian Press that the shipyard needed several upgrades that were not originally anticipated so it could build the new Canadian Surface Combatant Ships.
That surface combatant project, the largest single purchase in Canadian government history, has already fallen behind schedule and the cost to taxpayers has skyrocketed: from an original $26 billion to $77 billion, according to Parliamentary budget officer Yves Giroux. MPS on the House of Commons government operations committee say they expect the cost for the 15 ships to be around $100 billion.
Procurement Minister Filomena Tassi declined to confirm how much Irving was asking for from taxpayers or when the Liberal government intended to make its decision. She also declined to comment on why she wasn't cancelling Irving's original winning bid as the firm had since indicated it would have difficulty meeting the project requirements without extra funding.
“I, along with my department, continue to work with our NSS ( National Shipbuilding Strategy) partners to ensure the ships that the Royal Canadian Navy and the Canadian Coast Guard require are delivered in a timely and efficient manner,” she noted in a statement to this newspaper. “This involves continually monitoring progress and mitigating against risks to timelines and budgets. I cannot discuss any specific request at this time.”
Irving declined to discuss how much money it was seeking from taxpayers and what it would do with the funding if it was received.
Mary Keith, Irving's vice-president of communications, said the Halifax Shipyard was on track to cut steel on the first surface combatant in 2024.
“As is typical in any shipyard transitioning to a larger and more complex ship, (Irving Shipbuilding) has developed plans to optimize cost, schedule, and quality,” she noted in an email. “The business case demonstrates the significant benefit to the CSC program.”
The Conservative government started the surface combatant project, but in 2015 acknowledged the cost was increasing and the program might have to be scaled back.
But the Liberal government elected in 2015 reaffirmed its commitment to the CSC project. Under the Liberals, the cost has continued to climb. Critics have warned the project is out of control and is lacking oversight from government officials who have allowed the costs to balloon.
Parliamentary budget officer Giroux told MPS last year that part of the risk with the CSC project came from the Royal Canadian Navy's decision to select the Type 26 frigate, which at the time existed only on the drawing board.
“There doesn't seem to be a clear rationale when it comes to explaining these cost increases,” Giroux noted during an appearance before a Commons committee last year. “I'm concerned.”
The Department of National Defence, however, has rejected the PBO cost estimates. It states the overall CSC project cost will be between $56 billion and $60 billion. DND officials have insisted that the cost will not go beyond those figures and that it has no intention of changing course or considering anything but the Type 26 design.
Earlier this year, an Australian government defence assessment found that country's new warships, which have the same basic Type 26 design as the vessels Canada plans to build, are too slow and have been deemed unsafe. A November 2021 assessment of that country's frigate procurement highlighted concerns about the untested “immature” ship design.
THERE DOESN'T SEEM TO BE A CLEAR RATIONALE ... I'M CONCERNED.